Why Paul Kelly thinks expansion would help end NHL lockout
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11-01-2012, 08:45 PM
Join Date: May 2009
Location: New Orleans
Originally Posted by
Define "bottom feeder teams": Of course (technically) there are always going to be teams on the bottom and teams on the top in terms of revenue, but that doesn't mean the league should keep the bottom teams because of that. If that's the case why doesn't the league just get rid of Toronto: Revenues wil plummet (as will the cap) and the great hockey markets of Florida and Phoenix will thrive! Then we'll have the joy of another lockout as "NHL players' salaries take-up too much of the league's revenues".
But that's my point: If the system actually operates better when you remove TOR, MON and NYR than if you remove NYI, PHX, CBJ, doesn't that mean the problem is the SYSTEM and not the TEAMS?
While the league is long-term better off with better markets and no teams "being a drain," the goal is to get as many teams as possible within the salary range with 50-57% of their HRR going to the players.
Let's say everyone in the league was making at least $90 million in revenues (and everyone else is unchanged). That adds $114 million to the revenues of the bottom 11 teams. You would think this would make the league better: No more "bottom feeders."
And it would, but not by much. Instead of 11 teams with 57% of HRR a combined $64.76 million below the floor, you'd have 12 teams a combined $61.39 million below the floor. So you need $114 million in revenues to cover $3.45 million in increased player costs. That is a broken model.
To solve the league's woes, you simply set up the system to be based on "THE MIDDLE TEAMS" instead of the "AVERAGE TEAM."
Using the MEDIAN of league revenue as your baseline for the the payroll midpoint, five teams move from below average to above average (and can pay small amounts into revenue sharing).
21 teams would be in the payroll range. The "bottom feeders" are a combined $10.3 million below the floor. And there's only two of them: NYI and PHX. NYI has a new building coming, so don't worry about them. Make the eligible for revenue sharing for a couple years (plenty to go around now: fewer teams need less money to hit the midpoint or floor)
Let's say NYI moving to Brooklyn gives them $98 million 2011 revenue dollars.
If you moved PHX to QUE and they matched OTT's revenues, the AVERAGE revenue would go up $8.3 million (and the midpoint $4.73 million). But based on MEDIAN, the midpoint only goes up $1.5 million with those two franchise moves.
All 30 teams would be either "within the payroll range" or (six teams) comfortably spending to the cap (based on 2011 dollars).
Of course, that works using 2011 dollars. The problem is you need the growth rate of the median and the bottom to be as close to the same as possible going forward. But it is a lot easier to keep up with the median growth rate (about 27%) than it is to keep up with the average growth rate (38%).
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